The Rooster Call: Forex Market in Need of Breakout

Hit the Mark Trading’s Brief Review of Overnight Market Action Setting the Tone for the Trading Day

Good morning, traders! Last night we looked at a few currencies discussing how the Forex market is in need of some kind of breakout after drifting side ways in tight range. This is a trading market for the nimble and quick until a catalyst breaks the side way range. I think the trading level is dangerous for newbies. Be careful.

Canadian Dollar looks to have put in a bottom, yet the market is waiting for Friday’s Canadian GDP numbers. Again, like other currencies the CAD fails to gain traction.

The news wires are talking about the Chinese Yuan dropping in value suggesting the Chinese central bank is experimenting with a more relaxed approach allowing the currency to fluctuate based on macro economic developments (BMO Capital Markets).

Emerging markets (as judged by EEM and EEB) have run up to our trend bench mark. If trend holds then we expect downward price action shall resume. Alternatively, we could see new trend develop that would serve as an overall positive for global stock markets and risk acceptance.

Like the currencies, US bonds are stuck in side way “give and take” action. Meanwhile we look for follow-through on ES over Monday’s knee-jerk move higher. A “turn around” Tuesday would have price falling today. Since price is stuck at resistance a trading range is developing that will eventually break. Until a break occurs the trading range is 1844 to 1820.

Brent is lower and US crude lower even as trouble brews in South Sudan oil fields. US crude is finally showing what appears the start of increased trading range. Day traders take note. Separately, natural gas fell out of bed yesterday on warmer weather reports.

FTSE tripped on profit-taking and lower prices paid for mining stocks. Iron ore and copper both falling thanks to China.

Coffee is trading lower for adventurous day traders. Meanwhile any runners on our JO position (proxy for coffee futures) registered a 200% return on investment for runners. By all means don’t get greedy.

Macy’s and Home Depot reported revenues miss with their earnings release today. Blame it on the weather.

Bitcoin is imploding. Let this serve as a lesson to anyone attempting to start an alternative currency.

Today’s Reports and FED Activity

09:00AM ET – S&P Case-Shiller Home Price Index
10:00AM ET – Consumer Confidence
10:00AM ET – FED Richmond, VA Regional Manufacturing Index
10:10AM ET – FED Tarullo Speaks

Overnight/Pre-Market

  • The energy complex is moving lower and day traders should monitor for CL trading. Looks like the major hands are engaging in profit-taking.
  • Copper continues weakness.
  • Gold hardly moving.
  • Grains quiet.
  • Softs quiet.
  • Bonds quiet.
  • US Dollar lower. All other major currencies higher against US dollar except CAD and Aussie.
  • ES/YM/NQ/TF are lower awaiting US market open.
  • STOXX 50 flat.
  • DAX incrementally lower.
  • FTSE 100 lower.

Day Trader Bench Marks

Intraday ES Floor Pivots – Using 24 hour electronic market hours 1800-1715 ET.

R3: 1885.25
R2: 1871
R1: 1857.75

Main floor pivot: 1843.50

S1: 1830.25
S2: 1816
S3: 1802.75

Intraday Euro Floor Pivot – Using 24 hour electronic market hours 1800-1700 ET.

R3: 1.3836
R2: 1.3804
R1: 1.3771

Main floor pivot: 1.3739

S1: 1.3706
S2: 1.3674
S3: 1.3641

Think About This…

I will send a separate note on TJX and ADSK. Earnings are tomorrow before market open and after close respectively.

Reminder of a Trend and Momentum Total Immersion Intensive Boot Camp scheduled for March 1. For more information click here: http://www.hitthemarktrading.com/boot-camp-.html

Yesterday, I advised I was asked to participate in the ICE/Trader Kingdom sponsored Spring Trading Clinic on March 13. Click here for early registration if you would like to attend this free trading education webinar: http://traderkingdom.com/futures-trading-education-events/details/612-spring-trading-clinic-ride-the-price-wave-with-momentum-trading

Have a great trading day!

To learn more from Martin, visit HitTheMarkTrading.com to join his mailing list and receive blog updates.